From Generation to Generation: Why 70% of Family Wealth Is Lost

The issue of wealth transfer is becoming increasingly relevant amid economic instability and the growing complexity of financial systems. For affluent families, passing down wealth to future generations is not just about transferring assets—it is a strategic task tied to preserving heritage, family values, and ensuring financial sustainability.

The statistics are alarming: up to 70% of family wealth is lost by the third generation, and 90% of fortunes do not survive beyond the fourth. The main reasons include unprepared heirs, a lack of structured asset management, and the absence of strategic planning.

The Generational Wealth Challenge: Why Are Heirs Unprepared to Manage Capital?

Modern heirs face fundamentally new challenges:

• Technological advancements and digitalization are reshaping investment approaches and personal finance management.
• Shifting social values are changing attitudes toward wealth, making traditional management strategies less effective.
• Globalization complicates the oversight of assets spread across multiple jurisdictions.

According to Credit Karma, 43% of Gen Z and 41% of millennials suffer from “money dysmorphia”—a cognitive distortion in which individuals either underestimate or overestimate their financial situation.

Even more concerning findings come from Credit Suisse: the new generation is less inclined to invest and is expected to earn one-third less from stock and bond investments than their parents. This means that without financial education and a well-structured management system, family wealth is inevitably at risk of depletion.

Why Is 70% of Family Wealth Lost?

Lack of Heir Preparation

A Williams Group study found that 90% of family wealth does not survive to the third generation due to unprepared heirs. Most lack practical knowledge of investments, taxation, and asset structuring.

Neglecting Strategic Wealth Management

According to U.S. Trust, 60% of wealthy parents believe their children are not ready to manage a large inheritance. The primary concern is their heirs’ lack of financial discipline and investment decision-making experience.

Legal Structuring Mistakes

Without a well-thought-out wealth transfer strategy, assets may be vulnerable to tax risks, legal disputes, and financial claims.

How to Preserve Family Wealth?

• Financial and Tax Planning. A properly structured tax system and legal framework help minimize risks.
• Investment Strategies. Diversified portfolios protect capital from market fluctuations and ensure steady growth.
• Heir Preparation. Financial education and early involvement in wealth management foster strategic thinking and investment literacy.

How Does Raison Help Affluent Families Manage Wealth?

Raison is an international investment company specializing in strategic wealth management for family offices and private investors.

With deep expertise in global markets, modern investment tools, and a personalized approach, Raison develops solutions that meet the highest standards. We ensure that our clients can confidently pass down their legacy to their children and grandchildren, securing stability and new opportunities for the next generations.

Join Raison’s webinar on February 6, 2025, to learn how to preserve and transfer wealth for future generations.

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